VSS vs. VNQ

Last updated Jun 4, 2026

VSS (Vanguard FTSE All-World ex-US Small-Cap ETF) and VNQ (Vanguard Real Estate ETF) are both exchange-traded funds - VSS is a Foreign Small & Mid Cap Equities fund tracking the FTSE Global Small Cap ex US Index, while VNQ is a REIT fund tracking the MSCI US Investable Market Real Estate 25/50 Index. Both are passively managed. Over the past 10 years, VSS returned 8.07%/yr vs 5.21%/yr for VNQ. A 0.56 correlation means they provide meaningful diversification when combined. VSS charges 0.07%/yr vs 0.13%/yr for VNQ.

Performance

VSS vs. VNQ - Performance Comparison

The chart below illustrates the hypothetical performance of a $10,000 investment in Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) and Vanguard Real Estate ETF (VNQ). The values are adjusted to include any dividend payments, if applicable.

Returns By Period

In the year-to-date period, VSS achieves a 10.57% return, which is significantly higher than VNQ's 7.83% return. Over the past 10 years, VSS has outperformed VNQ with an annualized return of 8.07%, while VNQ has yielded a comparatively lower 5.21% annualized return.

VSS

• 1D: -1.12%
• 1M: 1.27%
• YTD: 10.57%
• 6M: 13.10%
• 1Y: 27.32%
• 3Y*: 16.67%
• 5Y*: 5.76%
• 10Y*: 8.07%

VNQ

• 1D: -0.12%
• 1M: -1.10%
• YTD: 7.83%
• 6M: 6.75%
• 1Y: 9.97%
• 3Y*: 9.15%
• 5Y*: 2.18%
• 10Y*: 5.21%

*Multi-year figures are annualized to reflect compound growth (CAGR)

VSS vs. VNQ - Yearly Performance Comparison

	2026 (YTD)	2025	2024	2023	2022	2021	2020	2019	2018	2017
VSS Vanguard FTSE All-World ex-US Small-Cap ETF	10.57%	29.61%	2.94%	15.52%	-21.48%	13.05%	11.81%	21.36%	-18.48%	30.61%
VNQ Vanguard Real Estate ETF	7.83%	3.24%	4.81%	11.85%	-26.25%	40.54%	-4.61%	28.91%	-6.03%	4.90%

Correlation

The correlation between VSS and VNQ is 0.45, which is low. Their price movements are largely independent, making them effective diversification partners.

	Correlation
Correlation (1Y) Calculated over the trailing 1-year period	0.45
Correlation (3Y) Calculated over the trailing 3-year period	0.53
Correlation (5Y) Calculated over the trailing 5-year period	0.58
Correlation (10Y) Calculated over the trailing 10-year period	0.52
Correlation (All Time) Calculated using the full available price history since Apr 7, 2009	0.56

The correlation between VSS and VNQ shifts across timeframes, from 0.45 (1 year) to 0.58 (5 years), reflecting how their relationship changes across market environments.

VSS vs. VNQ - Sectors Allocation Comparison

Sectors	VSS	VNQ
Industrials	18.7%	0.0%
Technology	13.3%	0.3%
Basic Materials	12.1%	1.1%
Financial Services	10.8%	0.1%
Consumer Cyclical	9.3%	-
Real Estate	7.3%	97.3%
Healthcare	6.2%	-
Energy	4.9%	0.1%
Consumer Defensive	3.4%	-
Utilities	2.5%	-
Communication Services	2.3%	0.6%

Return for Risk

VSS vs. VNQ — Risk / Return Rank

Compare risk-adjusted metric ranks to identify better-performing investments over the past 12 months.

VSS

VSS Risk / Return Rank: 51
VSS Sharpe Ratio Rank: 53
VSS Sortino Ratio Rank: 51
VSS Omega Ratio Rank: 54
VSS Calmar Ratio Rank: 47
VSS Martin Ratio Rank: 53

VNQ

VNQ Risk / Return Rank: 23
VNQ Sharpe Ratio Rank: 22
VNQ Sortino Ratio Rank: 21
VNQ Omega Ratio Rank: 20
VNQ Calmar Ratio Rank: 25
VNQ Martin Ratio Rank: 27

The rank (0–100) shows how this investment's returns compare to the risk taken. Higher = better. Based on the past 12 months of data, combining Sharpe, Sortino, and other metrics used by quantitative funds and institutional investors.

VSS vs. VNQ - Risk-Adjusted Trends Comparison

This table presents a comparison of risk-adjusted performance metrics for Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) and Vanguard Real Estate ETF (VNQ). Risk-adjusted metrics are performance indicators that assess an investment's returns in relation to its risk, enabling a more accurate comparison of different investment options.

	VSS	VNQ	Difference
Sharpe ratio Return per unit of total volatility	1.85	0.76	+1.09
Sortino ratio Return per unit of downside risk	2.54	1.12	+1.43
Omega ratio Gain probability vs. loss probability	1.34	1.14	+0.20
Calmar ratio Return relative to maximum drawdown	2.36	1.20	+1.16
Martin ratio Return relative to average drawdown	9.13	3.78	+5.35
Data is calculated on a 1-year rolling basis and updated daily. The trend shows the change in the indicator over the past month.

VSS vs. VNQ - Sharpe Ratio Comparison

The current VSS Sharpe Ratio is 1.85, which is higher than the VNQ Sharpe Ratio of 0.76. The chart below compares the historical Sharpe Ratios of VSS and VNQ, calculated using daily returns over the previous 12 months. A higher Sharpe Ratio indicates better risk-adjusted performance relative to the risk-free rate.

Sharpe Ratios by Period

	VSS	VNQ	Difference
Sharpe Ratio (1Y) Calculated over the trailing 1-year period	1.85	0.76	+1.09
Sharpe Ratio (5Y) Calculated over the trailing 5-year period	0.35	0.12	+0.24
Sharpe Ratio (10Y) Calculated over the trailing 10-year period	0.47	0.25	+0.22
Sharpe Ratio (All Time) Calculated using the full available price history	0.55	0.26	+0.28

Drawdowns

VSS vs. VNQ - Drawdown Comparison

The maximum VSS drawdown since its inception was -43.51%, smaller than the maximum VNQ drawdown of -73.07%. Use the drawdown chart below to compare losses from any high point for VSS and VNQ.

Drawdown Indicators

	VSS	VNQ	Difference
Max Drawdown Largest peak-to-trough decline	-43.51%	-73.07%	+29.56%
Max Drawdown (1Y) Largest decline over 1 year	-11.62%	-8.34%	-3.28%
Max Drawdown (3Y) Largest decline over 3 years	-15.73%	-17.46%	+1.73%
Max Drawdown (5Y) Largest decline over 5 years	-33.93%	-34.48%	+0.55%
Max Drawdown (10Y) Largest decline over 10 years	-43.51%	-42.40%	-1.11%
Current Drawdown Current decline from peak	-2.58%	-3.75%	+1.17%
Average Drawdown Average peak-to-trough decline	-9.64%	-13.63%	+3.99%
Ulcer Index Depth and duration of drawdowns from previous peaks	3.00%	2.64%	+0.36%

Volatility

VSS vs. VNQ - Volatility Comparison

Vanguard FTSE All-World ex-US Small-Cap ETF (VSS) has a higher volatility of 5.33% compared to Vanguard Real Estate ETF (VNQ) at 3.72%. This indicates that VSS's price experiences larger fluctuations and is considered to be riskier than VNQ based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Volatility by Period

	VSS	VNQ	Difference
Volatility (1M) Calculated over the trailing 1-month period	5.33%	3.72%	+1.61%
Volatility (6M) Calculated over the trailing 6-month period	12.64%	9.26%	+3.38%
Volatility (1Y) Calculated over the trailing 1-year period	14.81%	13.16%	+1.65%
Volatility (5Y) Calculated over the trailing 5-year period, annualized	16.46%	18.80%	-2.34%
Volatility (10Y) Calculated over the trailing 10-year period, annualized	17.27%	20.70%	-3.43%

VSS vs. VNQ - Expense Ratio Comparison

VSS has a 0.07% expense ratio, which is lower than VNQ's 0.13% expense ratio. Despite the difference, both funds are considered low-cost compared to the broader market, where average expense ratios usually range from 0.3% to 0.9%.

Dividends

VSS vs. VNQ - Dividend Comparison

VSS's dividend yield for the trailing twelve months is around 3.07%, less than VNQ's 3.69% yield.

Position	TTM	2025	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
VNQ Vanguard Real Estate ETF	3.69%	3.92%	3.85%	3.95%	3.91%	2.56%	3.93%	3.39%	4.74%	4.23%	4.82%	3.92%
VSS Vanguard FTSE All-World ex-US Small-Cap ETF	3.07%	3.39%	3.44%	3.14%	2.30%	2.74%	1.90%	3.25%	2.80%	2.83%	2.93%	2.66%

Frequently Asked Questions

Can I hold both VSS and VNQ in my portfolio?

VSS and VNQ have a correlation of 0.45, meaning they provide meaningful diversification benefit when combined. Depending on your allocation goals, holding both could reduce overall portfolio risk.

Which is riskier, VSS or VNQ?

VSS has higher volatility (5.33%) compared to VNQ (3.72%). In terms of maximum drawdown, VSS dropped -43.51% vs VNQ's -73.07%.

Which ETF is better, VSS or VNQ?

On 10-year performance, VSS leads with 8.07% vs 5.21% for VNQ. On fees, VSS is cheaper at 0.07% per year. On volatility, VNQ has been the lower-risk option at 3.72%. The better choice depends on whether you care most about return, fees, risk, or income.

Which ETF has performed better, VSS or VNQ?

Over the 10-year period, VSS has performed better with a 8.07% return vs 5.21%. Past performance does not guarantee future results, so compare this with risk, fees, and fund exposure.

Which ETF is cheaper, VSS or VNQ?

VSS is cheaper with a 0.07% expense ratio, compared with 0.13% for VNQ.

Which ETF pays a higher dividend yield, VSS or VNQ?

VNQ has the higher dividend yield at 3.69%, compared with 3.07% for VSS.

What is the main difference between VSS and VNQ?

VSS is categorized as Foreign Small & Mid Cap Equities, while VNQ is REIT. VSS tracks FTSE Global Small Cap ex US Index, while VNQ tracks MSCI US Investable Market Real Estate 25/50 Index. Their fees differ too: 0.07% for VSS and 0.13% for VNQ.

Which has better risk-adjusted returns?

VSS currently has the higher Sharpe Ratio (1.85 vs 0.76), meaning it's delivered slightly more return per unit of risk over the trailing 12 months. However, this ranking shifts over time - use the Risk/Return Score above for a more comprehensive view that combines Sharpe, Sortino, and other measures used by quantitative funds.